Previous Section Home Page

Column 317

I should explain that the construction of stage 2 is being managed by Railtrack's major project division under the guidance of Railtrack's midland zone, which is the sponsor, and that the value of the work is around £9 million. The civil engineering contract for the rail link, but not covering the track work and signalling, is the responsibility of Nottinghamshire county council and its own contractors on site.

It is the work on the rail link that has caused slippage to the project for the reasons that I have already explained. That has affected Railtrack's own costs and a contingency has been allowed within the £2.5 million increase for an extension of the signalling installation work within the present contract end date. That, in turn, means extra supervision and project management costs.

Despite what the hon. Gentleman said about spiralling costs, I think that he understands that they are not solely, or even mainly, the result of railway privatisation. Clearly, there are costs associated with the restructuring of the railways, but they are very much outweighed by previously poor estimating, some changes to the scope of the project and contingencies.

Over the past months Railtrack has attempted to regularise the position, establishing proper contractual relationships so that each party knows the amount being charged for the work carried out. They have moved, as far as possible, to a position of fixed-price contracts, where possible by competitive tender, given time scales and other constraints. The objective has been to give the county council as much confidence as possible over the anticipated final cost of the project.

My Department is in close touch with the county on the project and my wish to see stage 3 through to a successful conclusion is undiminished. In many ways it is the key element to the entire scheme.

We acknowledge that there is a funding gap and we have asked the county council to submit further information so that we can consider all the implications. I hope that, with continued co-operation, it will be possible to deal with the current difficulties.

The hon. Gentleman referred to increases in operational costs because of rolling stock leasing and track access charges. We have already accepted--I made this point to the county council--that the changes could affect the financial performance of the new service. I told the council that if the effect proved significant, it should be brought out in the further documentation that we have requested, and we would then reconsider the funding position and the split between grant and borrowings.

In regard to track access charges, I understand that the five-year operating agreement with BR to expire on 31 March 1998 was deliberately intended to give a degree of

Column 318

shielding from full charges during the initial period. My Department was not a party to that agreement, but it is one that the county council and the British Railways Board, and subsequently Railtrack, negotiated. Future infrastructure charges will be subject to the scrutiny of the Rail Regulator.

Stage 3 would take rail services to Worksop. Funding for local authority transport capital investment is made available through transport policies and programme. On the basis of TPP bids, a decision is taken on resource allocation and we normally make an announcement in mid-December.

In that context, we now have in place the package approach. Packages are essentially about a coherent local transport strategy for the area concerned. Nottinghamshire has done well in that respect. I pay tribute to that and £1.6 million has been allocated to the Greater Nottinghamshire area package for 1995-96.

Nottinghamshire included stage 3 in its TPP bid on the basis that work could commence in late 1996. It might be argued, therefore, that any bid for funding was premature at this stage. We have told Nottinghamshire county council that we are not able to fund stage 3 this year as a value for money case has yet to demonstrated, but it is open to the county to make a bid in its next TPP for resources in 1996-97. Incidentally, those bids are expected by 31 July each year. We would like the county council to carry out some more work on the scheme appraisal, which currently shows a significant shortfall not covered by the decongestion benefits. Although we will be happy to work with the county council over the coming months, and stage 3 is relevant, we must concentrate on completing stage 2 satisfactorily in the next few months.

I appreciate the hon. Gentleman's concern about different treatment between passenger transport authorities and his own authority. He was right to quote from my letter to him of 23 December. As I stated in that communication, PTAs and PTEs have statutory responsibilities as against those of transport and highway authorities, which have in this sense discretionary responsibilities. It would be unreasonable to place too much reliance on that as an argument for dealing in a fundamentally different way with infrastructure that ultimately will serve the same markets and people doing the same things. I indicated that I am prepared to examine that aspect but I do not want to set hard and fast rules now, except to say that it is clearly of importance to a scheme of this sort.

I share many of the aspirations of hon. Members representing constituencies in the area in question, and my hon. Friend the Member for Gedling has found time to join me on the Front Bench as an indication of his own concern. I will certainly look at the matter again.

Column 319

Yorkshire Water (Textile Industry)

2 pm

Mr. Graham Riddick (Colne Valley): I am pleased to have this opportunity to raise an issue of great concern to a number of firms in my constituency and throughout Yorkshire--the reception charge that Yorkshire Water intends to introduce for receiving trade effluent and sewage. Coming as it does on top of existing high charges, it will hit the textile industry--particularly dyers and finishers. Other industry sectors will be similarly affected. Dickinsons Dairy of Holmfirth, well-known producers of yoghurts and creams, also faces a large increase in charges.

My constituency contains a significant number of textile companies, many of which have written to me. I can do no better than quote a letter from Mr. S. H. Gledhill, joint managing director of James Dyson Ltd. in Linthwaite near Huddersfield:

"As a small company employing 50 people, following a management buy-out in 1989, we have improved our performance through the recession with the co- operation of our work force and a vigorous sales campaign. Over this period we have received swingeing increases from Yorkshire Water, well in excess of published inflation figures. We have, of course, introduced tighter control of effluent and also made capital investments to meet the National Rivers Authority and EC legislative requirements. Maintaining business in highly competitive times is extremely difficult and only so much can be absorbed through improved efficiency . . . Our current annual bill is around £36,000 and after three years this will be increased to £96,000, a rise of 150 per cent. Because the proposed increases are so high, businesses are likely to be affected detrimentally when trying to pass them on to their customers. As you are no doubt aware, retailers are very resistant to paying any increases at all at the present time." Companies affected by the new charge will receive no new or additional service. It is based simply on the volume of effluent discharged into the sewer. Yorkshire Water justifies the new charge on the grounds that it is getting industry to pay a proper share of waste treatment costs and that domestic customers are currently subsidising industrial customers.

Yorkshire Water and Ofwat have failed totally to provide facts or figures to substantiate those claims. Out of the blue and without consultation, Yorkshire Water wrote to trade customers last November saying that the new reception charge would be 15p per cubic metre in 1995-96, rising to 33p the following year and 50p in 1997-98. Yorkshire Water, no doubt in response to the furore that it created, told local companies this week that the charge will be 10.1p per cubic metre the first year and phased in over five years. We have made some progress, but the cost in the first year alone will range from £5,000 for a small firm to £60,000 for a local firm, Brooke Dyeing.

Once the full charge is introduced, the additional cost will range from £18,000 to a massive £245,000 for Brooke Dyeing. That successful textiles company employs 300 people at four sites within a five-mile radius of Meltham. Finding an extra £245,000 is a tall order for Brooke Dyeing, as it is for any company.

Mrs. Elizabeth Peacock (Batley and Spen): Does my hon. Friend agree that the new reception charge, which is being implemented without consultation, comes on top of millions of pounds of investment in effluent plants by the

Column 320

Yorkshire textile industry over the past two or three years, to conform with the regulations that my hon. Friend mentioned?

Mr. Riddick: My hon. Friend is absolutely right. Yorkshire Water has moved the goal posts and created difficulties for companies. My hon. Friend emphasises the action taken by local firms.

The consequence of absorbing Yorkshire Water's increased charges could be a reduction in employment at the firms affected and in the money available for investment. I find extraordinary the arrogant manner in which Yorkshire Water simply informed its customers of the new charge and that Ofwat appears to have been perfectly happy to go along with it without properly scrutinising Yorkshire Water's proposals.

One of my constituents told me, "If I treated my customers the way Yorkshire Water treated us, I would lose their business." Yorkshire Water may have felt able to behave that way because it has a monopoly--but that is why the Government introduced the existing regulation system. Ofwat exists to ensure that water companies do not abuse their monopolies.

Yorkshire Water claims that 12 per cent. of sewage comes from traders but that they contribute only 1 per cent. to the costs of the sewerage system. The Yorkshire branch of Ofwat says that only a small number of industrial customers account for 40 per cent. of Yorkshire Water's sewage but are not paying 40 per cent. of the cost of disposal. No evidence has been forthcoming from Yorkshire Water or Ofwat to justify those claims, which are not entirely consistent. Local industrialists stress that they entirely accept the "polluter pays" principle but are not prepared to tolerate a massive hike in trade effluent charges without full and proper justification--and that has not been forthcoming. Industry believes that it pays its fair share. It appears that Ofwat almost connived with Yorkshire Water in the way that the reception charge was introduced. In a letter to me dated 20 December 1994, Yorkshire Water's director of water services stated that the proposals were discussed with the Director General of Water Services, who

"`does not approve them' but satisfies himself that any undue discrimination element has been removed."

However, on 22 December, the chairman of Ofwat's customer services committee wrote to me, saying that he had asked Yorkshire Water to attend the committee's next meeting

"to explain the reasons for its change in charging policy." He added that he awaited a clear statement from the company on the rationale for its rebalancing exercise. Does the Yorkshire branch of Ofwat not know what its head office is doing?

To be fair, I received a letter this morning from Eric Wilson, who heads the Yorkshire branch of Ofwat and is clearly concerned.

Mrs. Peacock: It is a bit late for that.

Mr. Riddick: Exactly as my hon. Friend says. I thought that the regulator's purpose was to ensure that water companies behave properly and reasonably. If that was the case with Yorkshire Water, Ofwat should have acted to ensure that the industry was properly consulted and had time to adjust to the new charges, and that all the information on which the new charge was based was made available. Will my hon. Friend the Minister confirm

Column 321

that Ofwat has a responsibility to ensure that water companies behave reasonably towards industrial customers? Is he in a position to tell us why Ofwat did not ensure that Yorkshire Water consulted widely on the new charge?

Mr. John Gunnell (Morley and Leeds, South): Does the hon. Gentleman agree that his account of the difficulties faced by companies in his constituency, and of what appear to be the inadequate responses of the regulator, suggests some fundamental weaknesses in the way in which Yorkshire Water, as a monopoly provider in the area, has been set up and the powers of the regulator? Will he be demanding the evidence which I agree is necessary to prove that domestic consumers are footing the bill and that, as he suggested, many companies are getting off lightly? Does he believe that the figures should be made public by the regulator?

Mr. Riddick: I have made it clear that I think that Ofwat has fallen short in this instance. It clearly has a responsibility to ensure that Yorkshire Water does not exploit its monopoly position. To that extent, I agree with the hon. Gentleman.

Sir Donald Thompson (Calder Valley): Yorkshire Water has a monopoly only in Yorkshire. Yorkshire textile manufacturers could move their businesses to Scotland where they would find skilled and able people and where Scottish Water does not impose an effluent charge. Scotland wants to attract the textile industry. My hon. Friend has secured this debate because Yorkshire cloth is world renowned. It is the benchmark by which all other cloth is measured--there is nothing to compare it with. In one sense, therefore, Yorkshire Water does not have a monopoly. It will simply drive careful business men to other parts of the United Kingdom.

Mr. Riddick: My hon. Friend makes a telling point although, fortunately, Yorkshire has many other assets to make it an attractive place for investment. However, I entirely accept my hon. Friend's point.

In the textile industry, orders are often booked up to 12 months in advance. The industry heard only last November of the new charge to be introduced from April this year and therefore had only six months in which to prepare itself for a wholly unexpected additional cost. Local companies have been faced with significant increases in trade effluent charges in recent years. The charges for the current year--1994-95--went up by 11.1 per cent., well above the rate of inflation. That was because, in March 1993, Yorkshire Water informed the industry:

"Tariff adjustments are being made to ensure that our different customer groups contribute their fair share towards the cost of each service. This re-balancing is taking place over a three year period."

The industry suddenly finds itself being subjected to another rebalancing exercise and one has to ask what went wrong with the previous one. My information is that, once Yorkshire Water's reception charge has been fully implemented, its effluent discharge charges will be either the highest or second highest in the country. The Confederation of British Wool Textiles said that, because the reception charge is based on volume, the incentive for the industry to reduce pollutant concentration will be destroyed. In support of the claim that industrial dischargers are not paying their way, Yorkshire Water says that domestic effluent is easier to

Column 322

treat than industrial effluent. Yet the confederation has pointed out that Yorkshire Water's own figures disprove that. They show that the average chemical oxygen demand for domestic and industrial effluent is 965 mg per litre whereas dyehouses only effluent is in the range 400 to 700 mg per litre.

The head of Yorkshire Water's trade effluent section admitted at a meeting of the CBWT that Yorkshire Water needs trade effluent to dilute domestic effluent which tends to be more solid. I do not want to offend the sensibilities of any hon. Member by going into more detail, but it is an important point. These are the type of issues that Yorkshire Water should have discussed with its customers. Ofwat should also have ensured that they were debated properly before the new reception charge was imposed.

Most people accept that large treatment plants operate more efficiently than small plants and that individual companies do not have the financial resources or the space to install their own effluent treatment plants. The CBWT made the point that it would have been in everyone's interest if Yorkshire Water had tried to work with the industry to establish a few large treatment works rather than the present number of smaller units. This has not happened because Yorkshire Water, apparently with the green light from Ofwat, has not consulted the industry properly.

I have a suggestion to make. When we privatised British Telecom and British Gas it was felt that it would be very difficult to introduce competition in those two industries because it was not possible to duplicate the infrastructure that was already physically in place. However, since privatisation, we have achieved just that and the new Gas Bill takes that process much further. Has my hon. Friend's Department considered the possibility of introducing more competition in the sewerage industry? If not, perhaps it should do so. I suppose that the textile industry in Yorkshire should be grateful for small mercies. As I said, companies have now been informed that the reception charge to be introduced from 1 April is to be 10.1p per cubic metre, not 15p as originally notified. Yorkshire Water has also now said that the reception charge is to be phased in over five years rather than three. That will make the new charge slightly easier for companies to cope with, but it is still a massive additional cost for them to bear. Yorkshire Water has refused to tell companies whether the final charge will remain at the originally proposed 50p per cubic metre.

I believe that Yorkshire Water and Ofwat should re-examine the trade effluent reception charge. Is it really necessary? Let us have all the facts and figures out in the open so that companies can judge for themselves. If they are indeed not making their proper contribution, local companies will not be able to argue against the proposed new charge although they would still argue, justifiably, that the charge be phased in over a longer period.

Of course, I am well aware of the need to keep charges to domestic users as low as possible. I do not believe, however, that Yorkshire Water's recent treatment of local companies which, after all, create many jobs for our constituents, can be justified. I therefore hope that, as a result of this debate and the representations made by many people and many local companies, the proposed reception charge will be reviewed and postponed and introduced only if and when it has been justified.

Column 323

2.17 pm

The Parliamentary Under-Secretary of State for the Environment (Sir Paul Beresford): I thank my hon. Friend the Member for Colne Valley(Mr. Riddick) for having raised this matter and for having done it so delicately. I thought for a moment that it was going to be diverted into other pipelines. The central issue is the effect of the impending charge, or change in the charge, by Yorkshire Water and its method of charging for the handling of trade effluent. I shall deal succinctly with a few points, trying to miss some of the more scientific ones and, shall we say, the diagnosis of the differences in density between types of sewage. We can leave those for my hon. Friend to take to the meetings, which I am sure will take place. My hon. Friend asked directly whether I could confirm that Ofwat has a responsibility to ensure that water companies behave reasonably to industrial customers. I can confirm that but feel that it needs a little expansion. The hon. Member for Morley and Leeds, South (Mr. Gunnell) briefly mentioned Ofwat's responsibilities. Ofwat has a duty to ensure that the interests of every customer, domestic and commercial, are protected in respect of the fixing and recovery of charges and other terms on which all the services are provided. As my hon. Friend is obviously well aware, Yorkshire Water--unlike all other water companies--currently has a system of standing charges for trade effluent. It now proposes to return to a system more related to the "polluter pays" system that it used until the mid-1980s. I am sure that my hon. Friend agrees that that will ultimately prove more equitable, and it is along the same lines as the arrangements used by all other water companies, some of which also have textile manufacturers in their areas--competitors, in other words. From the point of view of Ofwat--and ultimately, I am sure, from the House's point of view --that approach must be fairer to all other trade and domestic users in Yorkshire, and to textile industry competitors elsewhere in the country.

As ever, the impact of the changes on traders will not be uniform. I understand that approximately 30 per cent. of trade customers may well gain from them, while 40 per cent. will face increases of perhaps 50 per cent. over five years. Regrettably, 9 per cent. of traders will face an increase of more than £10,000--at 1994-95 prices--over the same period. That means that the majority of traders will either gain from the changes, or face an increase of no more than £500.

As my hon. Friend will know, the main gainers will be the domestic customers who are currently effectively supporting the textile industry. As predicted, while those who have been hit by the proposed charges--and some have been hit quite hard--are protesting loudly, the gainers are conspicuous by their silence.

Mrs. Peacock: Is my hon. Friend telling us that specific reductions will be made in the bills of Yorkshire Water's domestic customers?

Sir Paul Beresford: I do not think that my hon. Friend is as naive as that. Surely she appreciates that it is a case of relative or proportional costs. I detect by her smile that she does.

Column 324

As I was saying, the gainers have been conspicuous by their silence, but I suppose that that can be put down to human nature. As my hon. Friend has pointed out, however, the biggest difficulty for the industry has been the lack of sufficient warning before the announcement. It is in that connection particularly that I side with my hon. Friend and others who have spoken, and it is in that connection that my hon. Friend seeks some action by Ofwat. Ofwat has, in fact, already intervened in compliance with its duty to the water industry's customers. As my hon. Friend pointed out, in seeking explanations from Yorkshire Water, Ofwat has succeeded in persuading it to phase the introduction of the reception charge over five years rather than the three originally proposed. Furthermore, the prospect of today's debate stimulated Yorkshire Water to act: the company has written to my hon. Friend the Minister for the Environment and Countryside, who is responsible for water, saying that it will take account of the industry's problems and consider the possibility of phasing in the reception charge over a number of years. It would appear, therefore, that while Ofwat has prised open the door, my hon. Friend and others have now enabled traders to approach Yorkshire Water directly through that door.

My hon. Friend asked whether additional competition could be introduced. I can reassure him that we are keen to introduce more competition in the water industry where appropriate, and a number of measures in the Competition and Service (Utilities) Act 1992 will facilitate that. We are continuing to consider possible ways of increasing scope for competition. It must be sensible to take advantage of every opportunity to promote fair competition, which will benefit all customers, whether domestic or commercial. If hon. Members feel that they have a contribution to make after the dust resulting from this small issue has settled, I shall be delighted to receive suitable suggestions. I emphasise the word "suitable". One of the advantages of the "polluter pays" approach on one hand and protests over costs on the other is that the combination sharpens attitudes to conservation and efficiency on both sides of the discussion. Today's debate has, I believe, contributed to persuading Yorkshire Water of the need for improved efficiency; and a progressively fairer allocation of costs may persuade some of the larger textile industries in particular to consider recycling, or at least to examine ways of reducing usage. I was interested by the point made by my hon. Friend the Member for Calder Valley (Sir D. Thompson)--who has now disappeared--but I fear that the idea that major industries will up sticks and move to Scotland may be pie in the sky.

My hon. Friend has used the debate to concentrate our minds constructively on resolving the issue. I believe that that will eventually lead to a fairer system, and encourage efficiency and conservation. Like the rest of the country, we are rightly moving towards a "user pays" system: as I have said, Yorkshire Water has used that system in the past, and it is currently employed by all other water companies.

We must accept that the extent and abruptness of the rise in charges has come as a commercial shock to some traders, especially in the textile industry. The attack launched by my hon. Friend has opened the door, and ensured an improved response from Yorkshire

Column 325

Water. I encourage him to continue his campaign of persuasion, and in particular to campaign for more competition in the present system. It is a difficult task; such competition must be reasonable and must reflect the mixed needs of domestic and trade users of sewerage and water supplies.

Ofwat has taken appropriate action, both in persuading Yorkshire Water to lengthen the phasing-in period and in persuading it that its current arrangements are unfair to the majority of users. Today's debate has inspired action from Yorkshire Water and forced it to listen further; I hope that that trend will continue.

Mr. Riddick: I find it rather surprising that Yorkshire Water's announcement came out of the blue, and that apparently there was no proper consultation between the company and Ofwat in the preceding

Column 326

months. If there had been, surely Ofwat would have told the company that it must talk to the industry about the charge. Can my hon. Friend shed any light on the discussions that took place before November?

Sir Paul Beresford: I cannot do so directly, but I look forward to my hon. Friend's report of discussions with the Office of Water Services and Yorkshire Water. The introduction of more competition means that, of course, new systems will have to be commercially sensitive. Today's debate and some of the cross reactions and words--made with some justification-- will warn water companies to ensure that they think twice before charging too promptly into action.

It being twenty-eight minutes past Two o'clock, the motion for the Adjournment of the House lapsed, pursuant to Order [19 December].

Column 325

Points of Order

3.30 pm

Mr. John McFall (Dumbarton): On a point of order, Madam Speaker. I should like to bring to your attention some correspondence that I have received relating to my private Member's Bill which is due to receive a Second Reading on 3 March. The British Field Sports Society has written to say that there is insufficient time for the Bill to pass through all its parliamentary stages. The correspondence also contains a letter from the hon. Member for Wimbledon (Dr. Goodson-Wickes) which tells colleagues that it is not the intention to divide the House as there will be insufficient time.

It is my contention that such correspondence will militate against a full debate and votes on a closure motion and Second Reading. It may also lead to a false impression being given to hon. Members. I seek your advice, first, on the propriety of an outside body such as the British Field Sports Society daring to interfere with the rights of Members of Parliament by stating that there is insufficient time. Secondly, is it in order for the hon. Member for Wimbledon, to whom I gave notice of this point of order by putting a message on the board at 2 pm, to speak for other hon. Members in a way in which he is not entitled to do?

Madam Speaker: There seems to be nothing wrong with the course of action that has been taken. Hon. Members often receive letters giving advice or guidance on what they might like to do. As the hon. Gentleman knows, letters and correspondence do not bind anyone to anything.

Ms Glenda Jackson (Hampstead and Highgate): On a point of order, Madam Speaker. During my contribution to last night's debate on passenger service requirements under rail privatisation, I was remiss in not declaring an interest--that I am sponsored by ASLEF, the Associated

Column 346

Society of Locomotive Engineers and Firemen. May I take this opportunity to apologise unreservedly to the House for that omission?

Madam Speaker: I am much obliged to the hon. Lady.

Mr. Peter Atkinson (Hexham): Further to the point of order raised by the hon. Member for Dumbarton (Mr. McFall), my hon. Friend the Member for Wimbledon (Dr. Goodson-Wickes) asked me to thank the hon. Gentleman for his courtesy in notifying him of the point of order and to apologise for the fact that he was unfortunately unable to be here.

Madam Speaker: I am obliged to the hon. Gentleman.

Mrs. Alice Mahon (Halifax): On a point of order, Madam Speaker. I do not know whether you have seen reports today that the Secretary of State for Health was summoned to see the Lord Chancellor about the legal action that was going to be taken against her because of her Department's lack of beds for severely disturbed mentally ill patients. Has the Secretary of State announced that she intends to make a statement on this alarming state of affairs?

Madam Speaker: I have had no notification that the Secretary of State for Health is seeking to make a statement to the House, at least not today.

While I am on my feet, may I say that some right hon. and hon. Members seem to think that it is rather smart or clever to manipulate the English language when referring to other right hon. and hon. Members across the Floor of the House. I remind the House of the wise words of "Erskine May":

"Good temper and moderation are the characteristics of parliamentary language."

I hope that hon. Members will bear that in mind in future interventions and that they will make use of the richness of the English language and select elegant phrases that express their meaning without causing offence to others. I know only too well from my postbag that some exchanges across the Floor of the House do not enhance it in the eyes of our electorate.

Column 347

Financing of Political Parties

3.34 pm

Mr. John Spellar (Warley, West): I beg to move,

That leave be given to bring in a Bill to regulate the financing of political parties by requiring disclosure of the source of donations, by the prohibition of donations from overseas, and by the publication of accounts.

Let me make it clear at the outset that my Bill does not concern state funding of political parties; it concerns the regulation of donations and accounts. It has three main aims--to prohibit donations from foreign nationals not normally resident in this country, and from overseas companies and Governments; to ensure the recording and publication of donations above a certain limit, not tied to a particular figure but probably about £1,000; and to require political parties to publish income and expenditure accounts in the same way as companies and trade unions.

Mr. Jacques Arnold (Gravesham): Like Maxwell's donations to the Labour party from Liechtenstein?

Mr. Spellar: I am pleased to hear that there is all-party support for that last item. In 1949, the House passed a motion requiring parties to publish accounts, but unfortunately it has not yet been activated by the Tory party.

This is the third occasion on which I have presented the Bill. It is fortunate that it falls on a day on which the Tories are having to declare redundancies because of the collapse of their domestic operations. Regrettably, on previous occasions the Bill has been blocked by Government Whips. It is extraordinary that the Conservatives should be so reticent about disclosure; that could, after all, lead people to believe that they have something to hide. Presumably such feelings also led the Prime Minister to state in the House recently that he revealed the existence of donations only when they had resulted in a vote at his party conference. That must have caused people to ask why the Conservatives become so excited about what is essentially a modest proposal, which would be regarded as normal in most democracies.

The prohibition of foreign donations, for example, has been in force for some time in the United States, with no complaints and with general approval. People find it hard to understand why the Tory party seems to be excessively dependent on large donations or loans from people who do not even have a vote in this country. Perhaps we are being unfair, and all the stories have been fabricated by ill-intentioned media; in that case, the Bill would help the Tory party by dispelling unhealthy myths that thrive in an atmosphere of secrecy.

If, for example, the Conservatives had been required to declare donations, they might have had second thoughts about accepting £400, 000 or so from Asil Nadir. Think of the embarrassment that that would have saved them. If they had taken the money anyway, the report that they would have filed would have provided them with a record, enabling them to answer the receiver's questions about how much had been improperly donated. Their hapless head of administration, Mr. Judge, would not have had to admit that the records of donations had all been dumped in 1992--which was his explanation of why the Government were unable to accede to a perfectly reasonable request from the receiver.

Column 348

Furthermore, by publishing proper accounts Conservative central office would be able to demonstrate to party members that they had not been funding the £300,000 estimated legal costs run up by the unfortunate Mr. Judge in his ill-advised libel action against The Guardian . That is an important point. When it was revealed that the legal bill of the right hon. Member for Kingston upon Thames (Mr. Lamont) had been paid by Conservative central office, the party lost an estimated £500,000 in donations. Presumably even the dwindling hard core of Tory party members do not think that that is the reason for their wine and cheese parties and jumble sales. The party probably lost some members over that; although it is hard to tell, given the general collapse of Tory party membership--especially in the Young Conservatives, who were once the biggest youth movement in Europe but now have about the same number of members as any Trotskyist sect, and exhibit much the same behaviour. That is increasingly the nub of the problem, and it is presumably why the Conservative party is blocking any attempt to introduce transparency to its accounts.

Even the Prime Minister does not seem to be very well informed about the funding of his party. When I asked him about Tory party finances at Question Time on 19 October 1993, he said:

"There are a great many secret sources and they are all cheese and wine parties up and down the country."--[ Official Report , 19 October 1993; Vol. 230, c. 144.]

One would have to be a real dimwit to believe that.

The Tory party has recently admitted receiving more than £400,000 from Asil Nadir; an estimated hundreds of thousands, if not millions of pounds, from John Latsis, a Greek ship owner; money from Hong Kong billionaire Li Ka Shi; and funds from tax-evader and ex-Nissan boss Oktav Botnar.

Mr. Latsis and other ship owners and foreign business men are estimated to benefit from a tax loophole called foreign domicile tax status, estimated to cost the Exchequer £1 billion a year. That sum would have enabled the Chancellor to have been far more generous in imposing VAT on fuel, instead of trying to claw it back from all sorts of other taxpayers. That £1 billion a year is being given to very few people rather than being distributed among the population of the country. This country is one of only four in western Europe to have such an arrangement. The others are the Channel Islands, Luxembourg and Switzerland--all well-known tax havens.

If there were transparency, we would know clearly who was donating, who was benefiting and how much was being given. We would also know how the £15 million overdraft of the Conservative party is being covered. It would be extraordinary if a major bank were offering such a facility without proper security. What assets does the Tory party have and who is underwriting that huge sum? I suspect that many small business men would like the same generosity from their banks. The Royal Bank of Scotland seems to have much to answer for about overdrafts that it has given to business men.

The Bill will also deal with the amazing and increasing dependence of the Tory party on donations from individuals, corporations, foundations and-- possibly--even Governments from abroad, none of whom has a vote in this country. There are persistent rumours that many of the deals that have attracted public attention for other

Column 349

reasons--the Pergau dam affair, the Al Yamamah project in Saudi Arabia, the Malaysian arms deal and relationships with the Government of Brunei--all connect to donations to the Tory party.

The fundamental reason for all that is simple: the Tory party is in crisis. As it becomes increasingly unpopular, its membership is falling and aging away; as it is wiped out in local government, its local structure is withering; as it decimates industry, its traditional friends are closing their cheque books; as it loses Members of the European Parliament, its influence at European level is seen as eroding. The Government are now a narrow oligarchy, clinging to central state power, propped up by a few heavy-spending companies mainly from the City and by foreign interests. The Government are kept together only by their monopoly of patronage through honours, quangos and political favours.

The Bill corrects some of the worst abuses and ensures that the public know what is going on. I commend it to the House.

Question put and agreed to.

Bill ordered to be brought in by Mr. John Spellar, Mrs. Barbara Roche, Mr. Mike O'Brien, Mr. David Winnick, Ms Angela Eagle, Mr. D. N. Campbell- Savours, Mr. Andrew Mackinlay, Mr. Gordon McMaster and Mr. Chris Mullin.

Next Section

  Home Page